It’s been a wild and wooly couple of weeks on the international stock markets. But is the recent slide grinding to a halt. or just getting a breather prior to tumbling some a lot more? And much more importantly, what does it mean to astute penny stock traders?
Wall Street recently stumbled to its worst week of the year, and global stock markets fell dramatically on concerns about rising interest rates and slowing growth. Right after rising almost 9% in the very first four months with the year, the Dow Jones industrial average has fallen about 6.5% from a six-year substantial, reached May 10, 2006.
Stocks have been ailing due to the fact penny stock traders fear the Fed could be so focused on inflation that it ignores signs of an economic slowdown, raises interest rates too substantial and sends the economic system into a recession.
Global stock markets were sent reeling last week after golden-tongued U.S. Federal Reserve Chairman, Ben Bernanke shocked penny stock traders in saying the Fed will continue raising interest rates to keep inflation in check.
And that decision will have a direct impact on the penny stock marketplace. Higher interest rates hurt penny stock prices because traders believe it will curb economic growth and corporate profits.
But why is inflation heating up? Higher vitality costs. Traders and penny stock investors are also worried that using the hurricane season officially under way, Gulf Coast refineries and oil production sites could be damaged again this summer and fall.
And higher interest rates have the ability to affect the entire economic climate. Finance charges on credit cards will rise. So too will rates on mortgages and house equity loans, putting additional pressure on homebuyers and a softening housing marketplace. Ultimately, it will price a lot more to borrow for expansion.
But does this signal doom-and-gloom for the penny stock market? Au contraire. While the temptation to sell everything can be overwhelming, some see this as an excellent possibility. “I would not be selling. I would tend to be buying,” said a single New York analyst.
So how precisely is this an opportunity? It just so happens that numerous firms caught in the market’s downward spiral are cheaper than they were a few weeks ago. And as any seasoned penny stock investor will tell you, buying an excellent penny stock when it’s been beaten down isn’t a bad way to make funds over the lengthy haul.
If it is possible to stomach some from the volatility that’s. While many blue chip investors have difficulty handling the market’s unpredictability. it’s par for the course.
So, “snap out of it,” said another watcher. A month of dizzying selling has brought the markets into an attractive range. Is it possible the markets will fall much more? Completely. After all, no penny stock is really a sure thing. But one thing is certain: “Stocks are very much cheaper now than they were two months ago.”
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